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The Role of the Director and the Manager During a Financial Crisis Steven W. Weil, Esq.
Fiduciary Duty • The Board: Monitor, Delegate, Decide, Document • The Treasurer’s Role • The Manager’s Role • Indemnification and Insurance
Investment Goals • Safety, Liquidity and Yield • Safety – protecting principal from excessive risk • Liquidity – ease/cost of accessing funds • Yield – return • Correspond maturities to repair needs
Preserving Funds • Maintain funds: FDIC Insured/CDRS Accounts • Statutory requirement for Managers: (§1363.2) • Full Faith and Credit (T-Bills, Bonds) • FDIC Insurance up to $250,000 • Certificate of Deposit Account Registry Services (CDRS)
Board Procedures • Adopt investment policy / procedures • Follow and document • Quarterly reconciliations required • Quarterly investment review recommended • Standing agenda notice
Role of Treasurer(aka Chief Financial Officer per Corp §7213) • Financial oversight • Regular conduit between board / financial consultant • More regular dialogue with CPA / Manager • Reports discussed at open meetings / member input
Manager’s Role • Manager’s contract requirements • CACM Standards of Practice • Timely reporting and gathering / draft budgets • Does not have final word on anything • Manage expectations • Fidelity insurance
Protecting the Board, Treasurer and Manager • Indemnification (what is “good faith”?) • Insurance implements indemnity duty • Coverage issues: betterment / statutory violations • Timely notification (especially enforcement)
Prioritization: CC&R Enforcement • Precedent • Meet and Confer • Self Help
Prioritization: Expenses • Making the hard decisions • Deferred funding and repair • Deferring reserve contributions • Deferring payment of special assessments
Collecting Assessments • Review (Amp Up) Collection Policy • Handling assessment disputes (§1367.6) • Settlements • Lenders: Finding and fining them
Avoiding Expenses: Bankruptcy and Receivership • Homeowner bankruptcies • Post petition debt (2005 amendments) • CID bankruptcies? • Receiverships